Mesenchymal stem/stromal cells (MSCs) can be isolated from most adult tissues and hold considerable promise for tissue regenerative therapies. Some of the potential advantages that MSCs have over other adult stem cell types include: (1) their relative ease of isolation, culture and expansion; (2) their immunomodulatory properties; (3) they can provide trophic support to injured tissues; (4) they can be transduced by retroviral vectors at a high efficiency; (5) they have an ability to home to sites of inflammation and injury. Collectively these characteristics suggest that MSCs are attractive vehicles for cell and gene therapy applications. In the current study, we investigated whether transplantation of human adipose-derived MSCs (Ad-MSCs) engineered to overexpress the anti-inflammatory cytokine interleukin (IL)-4 was efficacious in experimental autoimmune encephalomyelitis (EAE). Ad-MSCs transduced with a bicistronic lentiviral vector encoding mouse IL-4 and enhanced green fluorescent protein (Ad-IL4-MSCs) stably expressed, relatively high levels of both transgenes. Importantly the phenotypic and functional attributes of Ad-IL4-MSCs, such as the expression of homing molecules and differentiation capacity, was not altered by the transduction process. Notably, the early administration of Ad-IL4-MSCs in mice with EAE at the time of T-cell priming attenuated clinical disease. This protective effect was associated with a reduction in peripheral MOG-specific T-cell responses and a shift from a pro- to an anti-inflammatory cytokine response. These data suggest that the delivery of Ad-MSCs genetically engineered to express anti-inflammatory cytokines may provide a rational approach to promote immunomodulation and tissue protection in a number of inflammatory and degenerative diseases including multiple sclerosis.